Finally, Ohio has a new two-year operating budget.
Lawmakers failed to meet the June 30 deadline set by the state constitution, passing instead a temporary budget while deadlocking over tax cuts, education spending and more.
But as the 17-day extension was coming to the end, legislators came together Wednesday to pass a new $69 billion two-year budget to send to Gov. Mike DeWine. The governor signed the bill into law Thursday morning, nine hours after the temporary extension lapsed.
However, the legislature's budget didn't go unscathed: Before signing, DeWine vetoed 25 line items, mostly having to do with Medicaid, health care and education. He also rejected a major change to how the state deals with pharmacy middlemen.
Taxes Slashed
The House version of the budget, which had a lot of support from Democrats when it passed in May, would have scrapped tax breaks given to many small business owners that earned more than $100,000 a year. But the Senate liked the current system which allows those businesses to take up to $250,000 tax free.
In the end, the budget kept that tax break in place for everyone except lawyers and lobbyists. Republican state Sen. Matt Huffman (R-Lima), an attorney, doesn’t think it’s constitutional to exempt those two professions.
“Whoever ginned this up and thought it was a good idea just doesn’t like lawyers and lobbyists,” Huffman says. “Well, that’s a basis, but under law, it’s not a rational basis so it’s going to get held unconstitutional, I think. What do I know…I’m just a lawyer, right? But who are these lawyers that we hold in contempt that we are going to do something like this to them?”
Lawyers and lobbyists aside, eligible business owners will pay a 3% tax rate once they hit $250,000. And though they get a better tax deal, all working Ohioans will get a 4% break on their current income tax rate in this budget, with the lowest earners paying no taxes at all. But that’s a lower tax cut than was in either the House or Senate budgets.
Education And Opioids
The new budget restores $125 million for wraparound services that the House targeted to low income students, for a total of $550 million, and adds $120 million for children services to help families impacted by Ohio’s opioid crisis.
There’s also more money for mental health services in schools and addiction treatment. DeWine has been pushing for those changes.
Many of DeWine's vetoes related to Medicaid and health care changes. He vetoed some sections intended to give the state more power to control drug benefits for low-income Ohioans who rely on Medicaid.
One provision he vetoed would have set a single pharmacy benefit manager for the state – something that the House included in its original proposal. DeWine says Medicaid is willing to work on that goal but needs flexibility, and he wants more transparency.
He also rejected a provision that sought to give Ohioans itemized lists of medical expenses on nonemergency procedures, citing a recent executive order by President Trump. He struck another provision that eliminated the prohibition and fines on the sale of mesh crib liners, something DeWine says the American Academy of Pediatrics opposed.
Some of the legislature's most heated debates came over education changes. The budget sets new standards for high school graduation, something that lawmakers have long debated. Another section puts a moratorium on state takeovers of schools that are in academic distress until 2020, to offer time to come up with a better solution for failing schools.
But House Minority Leader Emilia Sykes (D-Akron), who ended up voting for the budget, says her members wanted lawmakers to scrap it entirely for the three school districts currently under the state’s control.
“That was a major failure of this administration as well as the majority to fix that issue," Sykes says. "Obviously, the communities in Lorain, and Youngstown and East Cleveland really were hoping that the legislature would get to work for them. Unfortunately, that did not happen so they will remain in academic distress."
The budget will provide $125 million for private-school scholarships, something Democrats wanted DeWine to veto. But the governor kept that line, while striking a provision that guarantees a base amount of per-pupil funding for school districts. DeWine says that the wealthiest school districts would benefit the most.
He also restored a requirement that teachers in traditional and STEM schools be licensed by the Ohio Department of Education. And he cut a provision that would require the Education Department publish a list of community schools that are at risk of permanent closure for poor academic performance by August 31 each year, arguing that report cards aren't issued until September 15.
Two-year budget also:
- Increases the minimum tobacco purchasing age to 21. DeWine vetoed a provision that would grandfather in people who turn 18 by October 1, 2019.
- Allots $172 million for DeWine's new "H2Ohio" water quality initiative.
- Adds a tax on vaping products.
- Provides $20 million to replace aging school buses.
- Slightly increases the percentage of state revenue that goes to funds for local governments and public libraries.
- Directs money to prevent parents having to relinquish custody of children with extensive mental disabilities in order to receive state-funded care
- Maintains the $40 million motion picture tax credit, with additional focus on Ohio businesses.
- Moves Ohio's 2020 presidential primary election to March 17, St. Patrick's Day.
Disagreements Remain
There were 14 Democrats who voted against the budget, along with three conservative Republicans, for a total of 17 "no" votes.
Sykes says Democrats in particular object to the provision that gives $7.5 million to crisis pregnancy centers, which steer women away from the option of abortion. That's almost eight times the amount of funding such centers received in the last budget.
Sykes says the budget that passed overwhelmingly by the House in June was much better. House Speaker Larry Householder also liked that version of the budget, but says this spending plan will be good for Ohio.
“When you look at this as a total program, this entire two-year state budget that we just passed, we do so much for communities, to rebuild communities and help rebuild our families here in Ohio and we know that that is actually truly the heart of Ohio…. our families," Householder says. "It’s what makes Ohio great."
Compared to the House, the Senate was pretty happy with the finished budget bill. When it came to key sticking points, Senate President Larry Obhof got much of what he wanted from the negotiations with Householder.
“We’re all focused on the same things, whether it is the House, the Senate or the Governor’s office," Obhof says. "We’re focused on making Ohio as strong as it can be and that means providing the key services that the people expect and need, making sure that we are protecting and preserving Lake Erie and the waterways and our environment but also providing tax relief to the hard-working men and women of Ohio."
Senators voted unanimously for their version last month, and in the end, only one Democrat voted against this final compromise.
